Commodity exposure adds to SNC’s risk

Article Excerpt

SNC-LAVALIN GROUP INC. $40 (Toronto symbol SNC; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 149.8 million; Market cap: $6.0 billion; Price-to-sales ratio: 0.6; Dividend yield: 2.5%; TSINetwork Rating: Average; www.snclavalin.com) has won a contract from the United Arab Emirate’s state-owned aluminum company to supply engineering services to its two smelters. SNC did not say how much the deal is worth, but it should complete the work in July 2018. The company’s $12.7-billion order backlog, as of September 30, 2015, is equal to 1.3 times its annual revenue. However, oil and mining jobs account for a third of that total. Low commodity prices could force these clients to postpone or cancel these projects. SNC-Lavalin is a hold. hold. …